WorldStage Newsonline (EXCLUSIVE)-- Three years after the introduction of the Market Development and Restructuring Initiative (MDRI) into the Nigerian insurance industry by the National Insurance Commission (NAICOM), stakeholders are of the view that the project has not lived up to expectations, NKECHI NAECHE writes.

In a bid to increase the insurance penetration and reposition the industry to take its rightful position in Nigeria's economy, NAICOM took a major step in 2008, coming up with an initiative code-named Market Development and Restructuring Initiative (MDRI).

The cardinal objective of the MDRI, according to the insurance industry regulator, was to deepen insurance penetration in Nigeria and the commencement of the enforcement of insurances made compulsory by law- sections 64 and 65 of the Insurance Act 2003.

It was designed to operate as the first phase of the necessary reforms in the insurance sector and focus on enforcement of compulsory insurance products, increase in insurance awareness and reduction in the incidence of fake insurance and insurance agency reform.

MDRI, a medium term industry development plan of the commission covering the period of 2009-2012, was to help create 250,000 new jobs.

NAICOM through MDRI also projected to achieve gross premium of N1.10 trillion, attain 3.0 per cent insurance contribution to the nation’s Gross Domestic Product as against 0.72 per cent in 2008, and attain premium per capita contribution of N7,500 from N1,200 in 2008 this year.

But despite the various steps so far taking by the commission to ensure a full realization of the objectives of the MDRI three years down the line, it has recorded no improvement in terms of creation of jobs, awareness or increased insurance penetration in the country, according to industry experts.

MDRI was launched in the six geo-political zones of the country including Lagos and Abuja, while full implementation commenced September 2011, according to NAICOM.

However, Managing Director of Linkage Assurance Plc, Gus Wiggle in an interview with Worldstage Newsonline , said that the project had not lived up to the desired expectations of the industry.

According to him, the MDRI had not been able to achieve the purpose of which it was established by the commission in 2008, adding that there was still a missing link in the system.

His word, “I don’t think it has achieved its desired purpose. There seems to be a missing link somewhere I don’t know. If it has achieved its objectives, am sure by now the industry will be reaping the benefits.”

He added that until the commission and industry operators were able to identify the challenges and the missing link in the initiative the objectives of increasing insurance penetration, creating 250,000 jobs and achieving gross premium of N1.10 trillion will not be visible by the end of 2012.

He was optimistic that with large population of over 160 million people, the objectives of the MDRI should be achieved, adding that South Africa population is not up to Nigeria's, yet its insurance gross premium and penetration are more.

He said, “We have the potentials and what it takes in this industry to achieve the N1.10 trillion mark, if only we can identify the thing that is missing in the project.”

A senior official with Nigeria Insurance Association (NIA) who spoke on condition of anonymity, said that the failure of the project was due to the inability of the commission to carry along members of the industry.

He added that the industry should not be a one man show were things were done without putting the people who made up the industry into consideration, saying nothing good would come out of MDRI by the end of 2012.

The official further said that the N1.10 trillion mark being envisaged by NAICOM cannot be realized this year taking into consideration that the industry GPI currently stands at a little over N200 billion and the economic crisis heightened with state of insecurity in the country.

According to the source, the public perception of insurance in Nigeria is still very poor and there continues to be unhealthy and unethical competitive practices among underwriters.

Similarly, the Group Managing Director of Oceanic Insurance, Prince Lafor Olateru-Olagbegi noted that the enforcement of the MDRI had been very slow, adding that it had not fulfilled the purpose of which the project was set out to achieve in the first place.

He added that the insurance companies had gone out to recruit agents in order to benefit from the opportunities inherent in the project, but that the people whose these policies were meant for were not taking it serious.

He emphasized the need for governments at all levels and in conjunction with NAICOM to come together and ensure that defaulters of the laws are punished, adding that without adequate enforcement, the objectives of the MDRI would not be accomplished.

“I believe that until governments put their hands down to ensure that the insurance laws are enforced, it will not work,” he said.

He said that the commission was not doing enough in the area of enforcement and compliance, adding that a lot of buildings were still being erected without insurance cover such as the occupier’s liability insurance and fire.

He explained that between 2009 and 2011, a lot of lives and properties worth billions of naira were lost to accidents, fire and even bombing, adding that third party motor insurance believed to be the cheapest in the motor business had not been embraced by the people.

He attributed the low insurance penetration to government inability to embrace and enforce insurance, adding that most government properties in the country didn’t have insurance cover and in most cases if they do have, they would be under insured.

He urged the commission to provide the enabling environment that will enable the MDRI project thrive, adding that more awareness should be created through the various media agencies.

Speaking recently at the LBS Pan African University, Breakfast meeting, the Commissioner for insurance, Mr Fola Daniel said, “If available statistics are anything to go by, one could conclude that the MDRI’s target of N2.5 trillion gross industry premium income by the end of 2015, and N6 trillion by the end of 2021 is on course.”

According to him, “the figures for the three successive years have revealed a sustained increase in the industry gross premium income. For instance, in 2009, industry gross premium income rose to N190 billion from N155billion in 2008; and N201 billion in 2010.”

He further said that with his re-appointment late last year, the commission would continue its drive to ensure that the insurance industry contributes to economic growth of the nation and will focus on consolidating on its achievements in the past four years while striving to break new grounds and build the industry.

The commissioner who at various occasions said that the success of the strategies would depend on the cooperation and support of all stakeholders, stressed that NAICOM did not expect less from all concerned.

“I believe insurance brokers and the agency system that we are about to revive have a crucial role to play in ensuring the success of the MDRI programme given their business network. They should be able to utilise the large size of their network spread across the country, to promote the good image of the industry and deepen insurance penetration,” he said.

“It then behooves the brokers to represent the industry effectively through prompt payment of claims and sustenance of high ethical standard. Insurance brokers must also strive to add greater value to the public. Insurance consumers have become more demanding and as such, brokers must be more proactive in meeting their changing needs.”

He however acknowledged that, “the present economic situation poses some challenges to insurance brokers, particularly, from the perspective of rendering insurance services with utmost professionalism. To be able to do this, they must be above board in professional knowledge and ethical standard.”